Pound Euro (GBP/EUR) Exchange Rate Tumbles as UK Insolvencies Soar
(Updated 13:55, 15/7/22) After an initially quiet morning, the Pound Euro (GBP/EUR) exchange rate has now slumped to a one-week low.
The downside in GBP/EUR came as the Eurozone’s latest balance of trade figures printed better than expected, giving the Euro (EUR) a modest boost.
Meanwhile, the Pound (GBP) came under pressure following news that company insolvencies in England and Wales rose by 40% year on year.
Number of corporate insolvencies exceeds 1,600 in June, up 40% on 2021 – business owners should not be complacent given ongoing economic pressures which will start to be felt in #insolvency numbers in next few months @R3PressOffice https://t.co/0spkTIaaC8 @accountancylive
— Accountancy Daily (@accountancylive) July 15, 2022
The impacts of the pandemic, Brexit and the Russia-Ukraine war are hammering UK businesses. John Bell, Director of licensed insolvency practitioners Clarke Bell, warned that the Tory leadership contest adds to the economic uncertainty:
‘The economy is in a state of flux as the Government goes into freefall and clamours to find a new leader and Prime Minister.
‘The uncertainty is set to stall the economy and unsettle UK plc.’
The Pound Euro pair is currently trading at around €1.1757, down from €1.1795 at the open of today’s European session.
Original article continues below:
Pound Euro (GBP/EUR) Exchange Rate Muted as Markets Brace for Later Releases
The Pound Euro (GBP/EUR) exchange rate is rangebound this morning amid a lack of trading impetus. There’s no UK data due out today and the Conservative leadership election continues to mute movement in the Pound (GBP). Meanwhile, EUR investors await upcoming Eurozone and US data.
Currently, GBP/EUR is trading in the region of €1.18, wavering sideways overall.
Pound (GBP) Wavers amid Lack of Data
Pound Sterling is fairly flat today as an absence of UK economic data leaves GBP investors without many signals to trade on.
The ongoing Tory leadership contest is also subduing Sterling. Five candidates remain, and the winner will have to steer the country through troubling economic times.
While the next Prime Minister remains unknown, GBP investors are exercising caution.
Euro (EUR) Rangebound ahead of US Reports
The Euro (EUR) is also rather quiet this morning ahead of some potentially impactful data from the Euro area and the US.
In the meantime, EUR may be trading true to its negative correlation to the US Dollar (USD). Despite an upbeat market mood, the safe-haven USD is holding steady as USD investors wait for today’s American retail sales and consumer sentiment releases.
These two reports could in part determine the size of the Federal Reserve’s next rate hike, so markets are understandably cautious.
Pound Euro Exchange Rate Forecast: EUR to Trade on USD Correlation?
This afternoon, EUR’s correlation with USD could cause significant movement. If the American data exceeds forecasts, markets may start pricing in a 100-bps hike at the Fed’s next meeting, which would likely boost the US Dollar and weigh on the Euro. If the data misses forecasts, USD could slip and EUR could climb.
As for the Pound, the ongoing political uncertainty may keep Sterling subdued.